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Twenty Dollar Trust Funds

Updated on December 15, 2016
The Christmas tree and trust funds.  Kids can get a gift-wrapped present and also a twenty dollar trust fund for the future.
The Christmas tree and trust funds. Kids can get a gift-wrapped present and also a twenty dollar trust fund for the future. | Source
Kids should understand very early the difference between cash and credit.
Kids should understand very early the difference between cash and credit. | Source
Bill Gates and his daughter Jennifer.  His net worth was reported as $79.2 billion in 2015.
Bill Gates and his daughter Jennifer. His net worth was reported as $79.2 billion in 2015. | Source

Rich Man Poor Man

It is difficult for parents to think about saving money for their children's future when they have been laid off work or just about to lose their jobs because of technology, shrinking demand for what they produce, jobs going to offshore countries with no minimum wage and other reasons, that are part of the so-called economic melt down.

Not all parents are like the Ambani family, which is regarded as one of the wealthiest families in India. They cut and paste their little earnings to take care of rent, transport, food and kids' schooling. Despite that, it might be a good idea to start the habit of saving a small amount, as little as $20 a month, for their kids' future.

Trust Funds For Ordinary Folks

Looking at trust funds for rich kids as a combination of savings and investment plan, will enable you to create a quasi-trust fund for your own kids.

You can drop something in the bank even if it is twenty dollars a month, starting when they are five years old or earlier.

The best way is to have a stop order in place where a certain amount of money leaves your account and is electronically deposited into your kids’ bank accounts.

Twenty dollars is just a figure. You could make it $100 or euros if your financial situation is pretty stable.

The term trust fund is intimidating because it is associated with the likes of Paris Hilton, but it is not a monopoly of the wealthy.

It is not where the money came from that matters, be it a divorce settlement between Hollywood stars with only one child or an inheritance from grandparents that have the patent to the USB. It is the intention that matters, which is investing money for your kids’ future.

The twenty dollars suggestion is a test drive. Can you really afford to close your eyes every month and contribute to a savings account that your kids will use when they are 18 or 21?

It might not be much in 15 years’ time because a loaf of bread or a six pack of bagels will be $20 dollars or more, but it will be something. Half a loaf is better than no bread.

Held in Trust Legal Term

It is very painful to be betrayed by someone you trust. That is where the term ‘trust’ comes from, but it is also a legal term.

The Free Dictionary by Farlex defines a trust as: a relationship created at the direction of an individual in which one or more persons hold the individual’s property subject to certain duties to use and protect it for the benefit of others.

A trust may be created for the financial benefit of the person creating the trust, a surviving spouse or minor children, or a charitable purpose.

Trustees are usually lawyers or financial institutions and their services are not free. This does not concern you because you are starting from scratch and not dealing with Papa Linux’s shares in a North Sea oil company he left for this favourite granddaughter Lily.

Although you are not operating at that level, it is important to know how a legal trust fund works.

Education Savings

The trust fund we have in mind is not for secondary or college education. It is advisable to have a separate savings account for that and banks offer all kinds of policies. Canada has something known as the Registered Education Saving Plan (RESP).

An RESP is a special savings account registered with the Government of Canada that allows money deposited for a child’s post-secondary education or training program, to grow tax-free.

RESPs can be left opened for up to 36 years and can be used by beneficiaries to pay for full-time or part-time studies in college, university, trade school, or apprenticeship programs. Source: British Columbia website.

A trust fund is just money your kids will use when they leave school and embark on independent lives that unfortunately, need money.


This is easier said than done because kids living in the year of the lord 2014 understand credit and credit cards in particular, more than something called a bank savings book.

The informal trust fund for your kids might be an uphill battle because credit is easily available. You have four credit cards and you can buy a car without a deposit.

Most credit card companies allow the main cardholder to get one or two more credit cards for parents. A lot has been written about the advantages of paying off what is on your monthly statement, but the reality is another story.

Hands up all those that do not worry about monthly credit card interest because they religiously settle their monthly credit card bill.

Contribution by Family and Friends

You can ask immediate family members and friends to deposit to the informal trust fund instead of buying another toy that will be discarded in three months.

You can even have a brain-storming session about it.

  • Bake some bread and let something roast in the oven.

  • Take family and friends to the toy room or kids’ bedrooms.

  • They must identify the toys they bought your kids for birthdays, special cultural days and Christmas.

  • This is the time for them to tell you how much they paid for the gifts.

  • Suggest that in future, they should deposit money in the trust funds rather than buy gifts.

  • You will also do the same. Deposit money in the bank for your nieces and nephews.

  • Encourage family members to take kids out on special occasions in lieu of gifts, like taking a train ride for kids that have never been on a train. Kids might actually look forward to going out with their aunts or uncles on their birthdays because they take them to ‘cool’ places, like car exhibitions at the nearby convention centre.

  • Some family members might like the idea so much, they might even deposit $500 for birthday gifts instead of spending $100 on each toy.

Credit Limitations

Creating a quasi-trust fund for your kids is the right direction to take because cash will always be king. Any credit, is given on the presumption that it will be settled with cash.

It is the modern version of a 'promissory note', meaning taking credit on the promise that it will be converted into cash.

Nobody talks to homeless people to find out who they are, where they have been and why they are without a roof over their heads.

If we did, we might discover that one of the reasons is the inability to manage credit, which leads to someone losing everything.

Creating a savings account, where members of the family deposit cash for your kids is the right education because it teaches kids the relationship between real cash and plastic cash.


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    • bonda profile image

      Nonqaba waka Msimang 2 years ago from Canada

      True! True! What for though, when everything is electronic? Maybe computers get salaries or wages. What can i say?

    • aesta1 profile image

      Mary Norton 2 years ago from Ontario, Canada

      A great idea. I hope bank fees don't erode it.